The Ministry of Finance continues to adhere to a rather conservative approach in forecasting budget revenues. They are expected to decline by 6% to 26.1 trillion rubles, mainly due to a drop in oil and gas revenues of almost 3 trillion rubles, Sergey Konygin, senior economist at Sinara Investment Bank, told Izvestia on September 28 in a commentary to Izvestia.
“The main reason is a potential slowdown in crude oil production and a reduction in gas and oil exports. Another reason is the rather low average price of Urals oil at the level of $70 per barrel to calculate taxes,” the specialist noted.
In turn, with regard to non-oil and gas revenues, this sector is expected to grow by 7.3% to 17.2 trillion rubles, Konygin said. According to him, the government plans to receive additional taxes from exporters and more dividends from state-owned companies: tax initiatives will bring additional budget revenues in the amount of 2.3 trillion rubles over three years (0.9 trillion rubles in 2023). And dividends from state-owned companies will add 2.2 trillion rubles in 2023-2025 (544.1 billion rubles in 2023), he said.
At the same time, the use of funds from the National Wealth Fund of Russia (NWF RF) is expected to be 2 trillion rubles, and the overplan debt is 1.7 trillion rubles.
“Finance Minister Anton Siluanov said that the funds of the National Welfare Fund could be reduced by 1 trillion by placing overplan debt. That is, the National Welfare Fund does not want to use it to the maximum, leaving a certain reserve in it. The FNB funds in terms of rubles will be provided to the Central Bank at the expense of the currency part of the NWF. In other words, there will be a change in the accounts of the Ministry of Finance with the Central Bank, ”the expert commented.
In turn, Capital Lab partner Evgeny Shatov suggests that the Ministry of Finance of the Russian Federation, apparently, plans to actively issue federal loan bonds in the near future, as well as to finance the upcoming budget deficit through windfall profits from the commodity business coming to the National Wealth Fund of the country. As he told Izvestia, the withdrawal of excess profits will occur due to an increase in the fiscal burden on business, that is, through an increase in the mineral extraction tax (MET) and export duties.
“In addition, the fiscal burden will increase for fertilizer and coal producers. With oil revenues shrinking, the deficit will become increasingly difficult to finance. Non-commodity incomes are rapidly declining due to the fall in exports to traditional trading partner countries due to sanctions, and structural reorientation is a rather inert process,” Shatov noted.
Earlier, on September 20, Kirill Rodionov, an expert at the Institute for the Development of Fuel and Energy Complex Technologies, told Izvestia that the plans of the Russian authorities to increase export duties and severance taxes for raw material exporters – oil and gas companies, as well as coal and fertilizer producers – are associated with risks for the federal budget, which came amidst sanctions, but they will make it harder for oil companies to face the effects of the EU embargo, which takes effect in December.
At the same time “Kommersant” citing sources, he wrote that the Russian government wants to cover the budget deficit at the expense of commodity exporters and is studying the possibility of increasing export customs duties for commodity exporters and the severance tax rate. It is planned that in 2023 these measures will bring the budget about 1.4 trillion rubles, and in 2023-2025 they will give more than 3 trillion rubles. It was noted that the proposals will be discussed on September 20 at the government commission on budget projections.
On September 11, the head of the Ministry of Finance, Siluanov, said that his department would have to work hard on the budget for the next three years. As the minister admitted, the development of this document will be the most difficult in his professional career. The new budget will have to take into account the attempts of the West to limit the supply of Russian oil, as external supplies affect the state’s income, Siluanov said.
#economist #explained #impact #reduction #oil #gas #revenues #budget #deficit